Granules India looks at further expansion

Hyderabad-based drug maker Granules India Limited, which recently acquired Auctus Pharma for Rs 120 crore, is looking towards further expansion of its business through both organic and inorganic routes.

“We strongly believe in growing our businesses and we are looking at organic growth. But if something comes up by the way that fits into our model, we may be looking at it (acquiring that company),” Granules managing director, C Krishna Prasad, told Business Standard.

Granules is looking at further expansions even though its executive director, Harsha Chigurupati, feels that the company will be able to “easily” achieve a turnover of Rs 2,000-3,000 crore with its existing products.

Granules expects to post a turnover of over Rs 1,000 crore this financial year as against  Rs 764 crore in 2012-13. In the first half of the current fiscal, its turnover stood at Rs 490 crore.

According to Chigurupati, the company is not going to acquire to add more molecules. It will acquire to add more capacities. However, as the Granules business model is volume driven, there are very few companies in the market that can cater to its capacities. Hence, Granules is forced to go for greenfield investments.

“We are laying very strong foundations for the future and the results will be seen four years from today,” Prasad said. Meanwhile, the company would continue to maintain its annual growth rate of  20-25 per cent, he added.

He said the real benefit of Auctus acquisition would be realised 3-4 years down the line. During the same period, Granules Omnichem Pvt Ltd would be fully operational.

GOPL is a joint venture between Granules and Belgium-based fine chemicals maker Ajinomoto Omnichem. The new facility, being set up at a cost of Rs 185 crore in Visakhapatnam, will be operational next year. However, it had to secure USFDA approvals to realise its full potential. This is expected to take 3-4 years.

Granules will be entering the contract research and manufacturing services (CRAMS) space through the JV.  It intends to manufacture high value active pharmaceutical ingredients (APIs) in therapeutic areas such as cardiovascular, CNS and oncology.  Additionally, the JV will work on second generation manufacturing processes to increase manufacturing efficiencies.

“The advantage with Ajinomoto Omnichem is that it is all about quality and there is no price pressure. The second advantage is that this gives us access to the type of management and companies that we do not have traditionally. That access opens up a lot of doors for us,” Chigurupati said.

With regard to Auctus, he said the main advantage was that it had FDA approved products. With these products, backed by Granules marketing strength, “the customers we get are significantly different. So, margins and revenues will improve.”   

Prasad is not worried about global pharmaceutical majors setting shop in India and their likelihood of competing with domestic companies in future in exporting products to the regulatory markets.